Q4 Net Sales and Core Sales Decline 9% Q4 Gross
Margin and Operating Margin Improve Versus Prior Year Full Year
Operating Cash Flow Increases $1.2 Billion Versus Prior Year
Provides Initial Outlook for Full Year 2024
Newell Brands (NASDAQ: NWL) today announced its fourth quarter
and full year 2023 financial results.
Chris Peterson, Newell Brands President and Chief Executive
Officer, said, "Since our leadership transition in May 2023, we
introduced and deployed a comprehensive corporate strategy, which
focuses on disproportionately investing in innovation, brand
building, and go-to-market excellence in our largest and most
profitable countries and brands as part of a clear set of Where to
Play and How to Win choices. Behind this clear focus, and amidst a
difficult external environment, we drove record productivity across
the supply chain, significantly improved cash flow by rightsizing
inventory, further reduced Newell's SKU count and took decisive
actions to strengthen the company's front-end commercial
capabilities, which are critical to returning Newell to sustainable
and profitable growth. The tangible progress on our strategy,
together with our actions to reduce overhead cost structure,
bolster our confidence that we are taking appropriate actions to
strengthen the organization, improve its financial performance and
create value for our stakeholders."
Mark Erceg, Newell Brands Chief Financial Officer, said, "We
dramatically improved the underlying structural economics of the
business during the fourth quarter, as both gross margin and
operating margin expanded significantly versus last year. In
addition, full year operating cash flow was very strong, increasing
by $1.2 billion to $930 million, which allowed us to reduce debt by
about $500 million. We remain confident that despite a challenging
macro-economic backdrop, the significant investments we are making
to augment our core capabilities and accelerate our business
transformation will allow us to fully operationalize our new
corporate strategy and strengthen the company's performance going
forward."
Executive Summary
- Fourth quarter net sales were $2.1 billion, a decline of 9.1
percent compared with the prior year period. Core sales declined
9.3 percent compared with the prior year period.
- Fourth quarter reported gross margin increased to 29.9 percent
compared with 26.3 percent in the prior year period. Normalized
gross margin increased to 32.3 percent compared with 26.6 percent
in the prior year period.
- Fourth quarter reported operating margin was negative 0.5
percent compared with negative 11.9 percent in the prior year
period, as both periods included the impact of non-cash impairment
charges. Normalized operating margin increased to 7.7 percent
compared with 4.9 percent in the prior year period.
- Fourth quarter reported diluted loss per share was $0.21
compared with $0.60 in the prior year period. Normalized diluted
earnings per share were $0.22 compared with $0.16 per share in the
prior year period.
- Full year operating cash flow increased by $1.2 billion to $930
million compared with outflow of $272 million in the prior
year.
- The company reduced debt to $4.9 billion at the end of 2023
compared with $5.4 billion at the end of 2022.
- In January 2024, the company announced an organizational
realignment, which is expected to strengthen the company's
front-end commercial capabilities and result in restructuring and
related charges in the range of $75 million to $90 million and
annualized pre-tax savings in the range of $65 million to $90
million, net of reinvestment.
- The company initiated its full year 2024 outlook for net sales
decline of 8 percent to 5 percent and normalized earnings per share
of $0.52 to $0.62.
Fourth Quarter 2023 Operating
Results
Net sales were $2.1 billion, a 9.1 percent decline compared to
the prior year period, reflecting a core sales decrease of 9.3
percent, as well as the impact of category exits and favorable
foreign exchange.
Reported gross margin was 29.9 percent compared with 26.3
percent in the prior year period, as the benefits from FUEL
productivity savings and pricing more than offset the impact of
fixed cost deleveraging and higher restructuring-related charges.
Normalized gross margin was 32.3 percent compared with 26.6 percent
in the prior year period, which represents the second consecutive
quarter of year-over-year improvement.
Reported operating loss was $10 million compared with $273
million in the prior year period. Non-cash impairment charges of
$68 million and $326 million were incurred in the current and prior
year periods, respectively, related to goodwill and intangible
assets. Reported operating margin was negative 0.5 percent compared
with negative 11.9 percent in the prior year period, as the
contribution from pricing, FUEL productivity savings and Project
Phoenix savings, as well as lower non-cash impairment charges, more
than offset the impact of lower net sales and higher restructuring
and related costs. Normalized operating income was $159 million, or
7.7 percent of sales, compared with $113 million, or 4.9 percent of
sales, in the prior year period.
Net interest expense was $70 million compared with $64 million
in the prior year period.
Reported tax benefit was $78 million compared with $81 million
in the prior year period. The normalized tax benefit was $10
million compared with $5 million in the prior year period.
Reported net loss was $86 million, or $0.21 diluted loss per
share, compared with $249 million, or $0.60 diluted loss per share,
in the prior year period.
Normalized net income was $92 million, or $0.22 normalized
diluted earnings per share, compared with $65 million, or $0.16
normalized diluted earnings per share, in the prior year
period.
An explanation of non-GAAP measures disclosed in this release
and a reconciliation of these non-GAAP results to comparable GAAP
measures, if available, are included in the tables attached to this
release.
Balance Sheet and Cash
Flow
Full year operating cash flow increased by $1.2 billion to $930
million compared with outflow of $272 million in the prior year
period, with the significant improvement largely driven by working
capital and a reduction in incentive compensation payments, which
more than offset the impact of lower operating income and higher
restructuring payments. The company continued to reduce
inventories, which declined nearly $700 million versus the prior
year period and nearly $250 million versus the third quarter of
2023.
At the end of 2023, Newell Brands had debt outstanding of $4.9
billion and cash and cash equivalents of $332 million, compared
with $5.4 billion and $287 million, respectively, at the end of
2022.
Fourth Quarter 2023 Operating Segment
Results
The Home & Commercial Solutions segment generated net sales
of $1.3 billion compared with $1.4 billion in the prior year
period, reflecting a core sales decline of 8.2 percent and the
impact of certain category exits, partially offset by the impact of
favorable foreign exchange. Core sales decreased in all three
businesses: Kitchen, Home Fragrance and Commercial. Reported
operating income was $31 million, or 2.4 percent of sales, compared
with operating loss of $300 million, or negative 21.6 percent of
sales, in the prior year period. Normalized operating income was
$162 million, or 12.7 percent of sales, compared with $58 million,
or 4.2 percent of sales, in the prior year period.
The Learning & Development segment generated net sales of
$635 million compared with $684 million in the prior year period,
as a core sales decline of 7.7 percent was partially offset by the
impact of favorable foreign exchange. Core sales decreased in both
the Writing and Baby businesses. Reported operating income was $80
million, or 12.6 percent of sales, compared with $88 million, or
12.9 percent of sales, in the prior year period. Normalized
operating income was $88 million, or 13.9 percent of sales,
compared with $98 million, or 14.3 percent of sales, in the prior
year period.
The Outdoor & Recreation segment generated net sales of $165
million compared with $211 million in the prior year period,
reflecting a core sales decline of 21.8 percent. Reported operating
loss was $45 million, or negative 27.3 percent of sales, compared
with $14 million, or negative 6.6 percent of sales, in the prior
year period. Normalized operating loss was $25 million, or negative
15.2 percent of sales, compared with $4 million, or negative 1.9
percent of sales, in the prior year period.
Full Year 2023 Operating
Results
Net sales for the full year ended December 31, 2023 were $8.1
billion, a decline of 14.0 percent compared to the prior year,
reflecting a core sales decrease of 12.1 percent, the impact of the
sale of the Connected Home & Security business at the end of
the first quarter 2022, as well as the impact of certain category
exits and unfavorable foreign exchange.
Reported gross margin was 28.9 percent compared with 30.0
percent in the prior year, as the impact of fixed cost
deleveraging, inflation and higher restructuring-related charges
more than offset the benefits from FUEL productivity savings and
pricing. Normalized gross margin was 30.2 percent, in-line with the
prior year.
Reported operating loss was $85 million, or negative 1.0 percent
of sales, compared with operating income of $312 million, or
positive 3.3 percent of sales in the prior year. Non-cash
impairment charges of $342 million and $474 million were incurred
in the current and prior year, respectively, primarily related to
goodwill and intangible assets. Normalized operating income was
$570 million, or 7.0 percent of sales, compared with $956 million,
or 10.1 percent of sales, in the prior year.
Net interest expense was $283 million compared with $235 million
in the prior year.
Reported tax benefit was $155 million compared with $40 million
in the prior year. The normalized tax benefit was $68 million
compared with a tax provision of $17 million in the prior year.
Reported net loss was $388 million, or $0.94 diluted loss per
share, compared with net income of $197 million, or $0.47 diluted
earnings per share, in the prior year. Normalized net income was
$330 million, or $0.79 normalized diluted earnings per share,
compared with $654 million, or $1.57 normalized diluted earnings
per share, in the prior year.
Project Phoenix and Organizational
Realignment Update
In January 2023, the company announced a restructuring and
savings initiative, Project Phoenix, which was substantially
implemented by the end of 2023. It incorporated a variety of
initiatives designed to simplify the organizational structure,
streamline the company’s real estate, centralize its supply chain
functions, which include manufacturing, distribution,
transportation and customer service, transition to a unified One
Newell go-to-market model in key international geographies, and
otherwise reduce overhead costs. The company implemented the new
operating model in the first quarter 2023, consolidating its prior
five operating segments into three operating segments: Home &
Commercial Solutions, Learning & Development and Outdoor &
Recreation. The company realized $154 million in pre-tax savings
during 2023 and is on track to realize annualized savings in the
range of $220 million to $250 million by the end of 2024. The
company incurred $97 million in restructuring and related charges
associated with Project Phoenix during 2023.
In January 2024, the company announced an organizational
realignment, which is expected to strengthen the company’s
front-end commercial capabilities, such as consumer understanding
and brand communication, in support of the Where to Play / How to
Win choices the company unveiled in June of 2023. In addition to
improving accountability, Newell’s organizational realignment
should further unlock operational efficiencies and cost savings,
reduce complexity and free up funds for reinvestment. As part of
the organizational realignment, the company is making several
organizational design changes, which entail: standing up a
cross-functional brand management organization, realigning business
unit finance to fully support the new global brand management
model, further simplifying and standardizing regional go-to-market
organizations, and centralizing domestic retail sales teams, the
digital technology team, business-aligned accounting personnel, the
Manufacturing Quality team, and the Human Resources functions into
the appropriate center-led teams to drive standardization,
efficiency and scale with a One Newell approach. The company will
also further optimize Newell’s real estate footprint and pursue
other cost reduction initiatives. These actions are expected to be
substantially implemented by the end of 2024. Once the
organizational design changes are fully executed, the company
expects to realize annualized pre-tax savings in the range of $65
million to $90 million, net of reinvestment, with $55 million to
$70 million expected in 2024. Restructuring and related charges
associated with these actions are estimated to be in the range of
$75 million to $90 million and are expected to be substantially
incurred by the end of 2024.
Outlook for First Quarter and Full Year
2024
The company initiated its outlook for first quarter and full
year 2024 as follows:
Q1 2024
Outlook
Full
Year 2024 Outlook
Net Sales
10% to 8% decline
8% to 5% decline
Core Sales
8% to 6% decline
6% to 3% decline
Normalized Operating Margin
2.4% to 3.2%
7.8% to 8.2%
Normalized EPS
($0.09) to ($0.05)
$0.52 to $0.62
The company initiated its outlook for full year 2024 operating
cash flow of $400 million to $500 million, including approximately
$150 million to $200 million in cash payments associated with
restructuring and related initiatives.
The company has presented or will present forward-looking
statements regarding core sales, normalized operating margin,
normalized earnings per share and free cash flow productivity.
These non-GAAP financial measures are derived by excluding certain
amounts, expenses or income, from the corresponding financial
measures determined in accordance with GAAP. The determination of
the amounts that are excluded from these non-GAAP financial
measures is a matter of management judgement and depends upon,
among other factors, the nature of the underlying expense or income
amounts recognized in a given period in reliance on the exception
provided by item 10(e)(1)(i)(B) of Regulation S-K. We are unable to
present a quantitative reconciliation of forward-looking normalized
operating margin, normalized earnings per share or free cash flow
productivity to their most directly comparable forward-looking GAAP
financial measures because such information is not available, and
management cannot reliably predict all of the necessary components
of such GAAP measures without unreasonable effort or expense. In
addition, we believe such reconciliations would imply a degree of
precision that would be confusing or misleading to investors. The
unavailable information could have a significant impact on the
company's future financial results. These non-GAAP financial
measures are preliminary estimates and are subject to risks and
uncertainties, including, among others, changes in connection with
quarter-end and year-end adjustments. Any variation between the
company's actual results and preliminary financial data set forth
above may be material.
Conference Call
Newell Brands’ fourth quarter and full year 2023 earnings
conference call will be held today, February 9 at 9:30 a.m. ET. A
link to the webcast is provided under Events & Presentations in
the Investors section of the company’s website at
www.newellbrands.com. A webcast replay will be made available in
the Quarterly Earnings section of the company’s website.
Non-GAAP Financial
Measures
This release and the accompanying remarks contain non-GAAP
financial measures within the meaning of Regulation G promulgated
by the U.S. Securities and Exchange Commission (the "SEC") and
includes a reconciliation of non-GAAP financial measures to the
most directly comparable financial measures calculated in
accordance with GAAP.
The company uses certain non-GAAP financial measures that are
included in this press release, the additional financial
information and accompanying remarks both to explain its results to
stockholders and the investment community and in the internal
evaluation and management of its businesses. The company’s
management believes that these non-GAAP financial measures and the
information they provide are useful to investors since these
measures (a) permit investors to view the company’s performance and
liquidity using the same tools that management uses to evaluate the
company’s past performance, reportable segments, prospects for
future performance and liquidity, and (b) determine certain
elements of management incentive compensation.
The company’s management believes that core sales provides a
more complete understanding of underlying sales trends by providing
sales on a consistent basis as it excludes the impacts of
acquisitions, divestitures, retail store openings and closings,
certain market and category exits, and changes in foreign exchange
from year-over-year comparisons. The effect of changes in foreign
exchange on reported sales is calculated by applying the prior year
average monthly exchange rates to the current year local currency
sales amounts (excluding acquisitions and divestitures), with the
difference between the current year reported sales and constant
currency sales presented as the foreign exchange impact increase or
decrease in core sales. The company’s management believes that
“normalized” gross margin, “normalized” operating income,
“normalized” operating margin, "normalized EBITDA", “normalized”
net income, “normalized” diluted earnings per share, “normalized”
interest and “normalized” income tax benefit or expense, which
exclude restructuring and restructuring-related expenses and
one-time and other events such as costs related to the
extinguishment of debt; certain tax benefits and charges;
impairment charges; pension settlement charges; divestiture costs;
costs related to the acquisition, integration and financing of
acquired businesses; amortization of acquisition-related intangible
assets; inflationary adjustments; fire related loss, net of
insurance recoveries; and certain other items, are useful because
they provide investors with a meaningful perspective on the current
underlying performance of the company’s core ongoing operations and
liquidity. “Normalized EBITDA” is an ongoing liquidity measure
(that excludes non-cash items) and is calculated as normalized
earnings before interest, tax, depreciation, amortization and
stock-based compensation expense.
The company determines the tax effect of the items excluded from
normalized diluted earnings per share by applying the estimated
effective rate for the applicable jurisdiction in which the pre-tax
items were incurred, and for which realization of the resulting tax
benefit, if any, is expected. In certain situations in which an
item excluded from normalized results impacts income tax expense,
the company utilizes a “with” and “without” approach to determine
normalized income tax benefit or expense.
The company defines "net debt" as short-term debt, current
portion of long-term debt and long-term debt less cash and cash
equivalents. "Free cash flow" is defined as net cash provided by
operating activities less capital expenditures. "Free cash flow
productivity" is defined as the ratio of free cash flow to
normalized net income less tax-effected restructuring and related
costs. We are unable to present a quantitative reconciliation of
forward-looking free cash flow productivity or normalized gross
margin to their most directly comparable forward-looking GAAP
financial measures because such information is not available, and
management cannot reliably predict all of the necessary components
of such GAAP measure without unreasonable effort or expense.
While the company believes these non-GAAP financial measures are
useful in evaluating the company’s performance and liquidity, this
information should be considered as supplemental in nature and not
as a substitute for or superior to the related financial
information prepared in accordance with GAAP. Additionally, these
non-GAAP financial measures may differ from similar measures
presented by other companies.
About Newell Brands
Newell Brands (NASDAQ: NWL) is a leading global consumer goods
company with a strong portfolio of well-known brands, including
Rubbermaid, Sharpie, Graco, Coleman, Rubbermaid Commercial
Products, Yankee Candle, Paper Mate, FoodSaver, Dymo, EXPO,
Elmer’s, Oster, NUK, Spontex and Campingaz. Newell Brands is
focused on delighting consumers by lighting up everyday
moments.
This press release and additional information about Newell
Brands are available on the company’s website,
www.newellbrands.com.
Caution Concerning Forward-Looking
Statements
Some of the statements in this press release and its exhibits,
particularly those anticipating future financial performance,
business prospects, growth, operating strategies, the benefits and
savings associated with Project Phoenix and the Organizational
Realignment, future macroeconomic conditions and similar matters,
are forward-looking statements within the meaning of the federal
securities laws. These statements generally can be identified by
the use of words or phrases, including, but not limited to,
"guidance," "outlook," “intend,” “anticipate,” “believe,”
“estimate,” “project,” “target,” “plan,” “expect,” “setting up,”
"beginning to,” “will,” “should,” “would,” "could," “resume,”
“remain confident,” "remain optimistic," "seek to," or similar
statements. We caution that forward-looking statements are not
guarantees because there are inherent difficulties in predicting
future results. Actual results may differ materially from those
expressed or implied in the forward-looking statements, including
impairment charges and accounting for income taxes. Important
factors that could cause actual results to differ materially from
those suggested by the forward-looking statements include, but are
not limited to:
- our ability to optimize costs and cash flow and mitigate the
impact of softening global demand and retailer inventory
rebalancing through discretionary and overhead spend management,
advertising and promotion expense optimization, demand forecast and
supply plan adjustments and actions to improve working
capital;
- our dependence on the strength of retail and consumer demand
and commercial and industrial sectors of the economy in various
countries around the world;
- our ability to improve productivity, reduce complexity and
streamline operations;
- risks related to our substantial indebtedness, potential
increases in interest rates or changes in our credit ratings,
including the failure to maintain financial covenants which if
breached could subject us to cross-default and acceleration
provisions in our debt documents;
- competition with other manufacturers and distributors of
consumer products;
- major retailers’ strong bargaining power and consolidation of
our customers;
- supply chain and operational disruptions in the markets in
which we operate, including as a result of geopolitical and
macroeconomic conditions and any global military conflicts,
including those between Russia and Ukraine and in the Middle
East;
- changes in the prices and availability of labor,
transportation, raw materials and sourced products, including
significant inflation, and our ability to offset cost increases
through pricing and productivity in a timely manner;
- our ability to effectively execute our turnaround plan,
including Project Ovid, Project Phoenix, the Network Optimization
Project and the Organizational Realignment;
- our ability to develop innovative new products, to develop,
maintain and strengthen end-user brands and to realize the benefits
of increased advertising and promotion spend;
- the risks inherent to our foreign operations, including
currency fluctuations, exchange controls and pricing
restrictions;
- future events that could adversely affect the value of our
assets and/or stock price and require additional impairment
charges;
- unexpected costs or expenses associated with dispositions;
- the cost and outcomes of governmental investigations,
inspections, lawsuits, legislative requests or other actions by
third parties, the potential outcomes of which could exceed policy
limits, to the extent insured;
- our ability to consistently maintain effective internal control
over financial reporting;
- a failure or breach of one of our key information technology
systems, networks, processes or related controls or those of our
service providers;
- the impact of U.S. and foreign regulations on our operations,
including the impact of tariffs and environmental remediation costs
and legislation and regulatory actions related to product safety,
data privacy and climate change;
- the potential inability to attract, retain and motivate key
employees;
- changes in tax laws and the resolution of tax contingencies
resulting in additional tax liabilities;
- product liability, product recalls or related regulatory
actions;
- our ability to protect our intellectual property rights;
- significant increases in the funding obligations related to our
pension plans; and
- other factors listed from time to time in our SEC filings,
including but not limited to our Annual Report on Form 10-K and
Quarterly Reports on Form 10-Q and other filings.
The consolidated condensed financial statements are prepared in
conformity with accounting principles generally accepted in the
United States (“U.S. GAAP”). Management’s application of U.S. GAAP
requires the pervasive use of estimates and assumptions in
preparing the condensed consolidated financial statements. The
company continues to be impacted by inflationary pressures,
softening global demand, focus by major retailers to rebalance
inventory levels, rising interest rates and the indirect
macroeconomic impact of global military conflicts, which has
required greater use of estimates and assumptions in the
preparation of our condensed consolidated financial statements.
Although we believe we have made our best estimates based upon
current information, actual results could differ materially and may
require future changes to such estimates and assumptions, including
reserves, which may result in future expense.
The information contained in this press release and the tables
is as of the date indicated. The company assumes no obligation to
update any forward-looking statements as a result of new
information, future events or developments.
NEWELL BRANDS INC.
CONDENSED CONSOLIDATED STATEMENTS
OF OPERATIONS (UNAUDITED)
(Amounts in millions, except per
share amounts)
Three Months Ended December
31,
Twelve Months Ended December
31,
2023
2022
% Change
2023
2022
% Change
Net sales
$
2,076
$
2,285
(9.1
)%
$
8,133
$
9,459
(14.0
)%
Cost of products sold
1,455
1,685
5,780
6,625
Gross profit
621
600
3.5
%
2,353
2,834
(17.0
)%
Selling, general and administrative
expense
544
544
—
%
2,001
2,033
(1.6
)%
Restructuring costs, net
19
3
95
15
Impairment of goodwill, intangibles and
other assets
68
326
342
474
Operating income (loss)
(10
)
(273
)
96.3
%
(85
)
312
NM
Non-operating expenses:
Interest expense, net
70
64
283
235
Loss on extinguishment of debt
—
1
—
1
Other (income) expense, net
84
(8
)
175
(81
)
Income (loss) before income
taxes
(164
)
(330
)
50.3
%
(543
)
157
NM
Income tax benefit
(78
)
(81
)
(155
)
(40
)
Net income (loss)
$
(86
)
$
(249
)
65.5
%
$
(388
)
$
197
NM
Weighted average common shares
outstanding:
Basic
414.2
413.6
414.1
415.7
Diluted
414.2
413.6
414.1
417.4
Earnings (loss) per share:
Basic
$
(0.21
)
$
(0.60
)
$
(0.94
)
$
0.47
Diluted
$
(0.21
)
$
(0.60
)
$
(0.94
)
$
0.47
Dividends per share
$
0.07
$
0.23
$
0.44
$
0.92
* NM - NOT MEANINGFUL
NEWELL BRANDS INC.
CONSOLIDATED BALANCE SHEETS
(UNAUDITED)
(Amounts in millions)
December 31, 2023
December 31, 2022
Assets:
Current assets
Cash and cash equivalents
$
332
$
287
Accounts receivable, net
1,195
1,250
Inventories
1,531
2,203
Prepaid expenses and other current
assets
296
312
Total current assets
3,354
4,052
Property, plant and equipment, net
1,212
1,184
Operating lease assets
515
578
Goodwill
3,071
3,298
Other intangible assets, net
2,488
2,649
Deferred income taxes
806
810
Other assets
717
691
Total assets
$
12,163
$
13,262
Liabilities and stockholders'
equity
Current liabilities
Accounts payable
$
1,003
$
1,062
Accrued compensation
190
123
Other accrued liabilities
1,375
1,272
Short-term debt and current portion of
long-term debt
329
621
Total current liabilities
2,897
3,078
Long-term debt
4,575
4,756
Deferred income taxes
241
520
Operating lease liabilities
446
512
Other noncurrent liabilities
892
877
Total liabilities
9,051
9,743
Total stockholders' equity
3,112
3,519
Total liabilities and stockholders'
equity
$
12,163
$
13,262
NEWELL BRANDS INC.
CONSOLIDATED STATEMENTS OF CASH
FLOWS (UNAUDITED)
(Amounts in millions)
Twelve Months Ended December
31,
2023
2022
Cash flows from operating
activities:
Net income (loss)
$
(388
)
$
197
Adjustments to reconcile net income (loss)
to net cash provided by (used in) operating activities:
Depreciation and amortization
334
296
Impairment of goodwill, intangibles and
other assets
342
474
Gain from sale of business
(1
)
(136
)
Deferred income taxes
(283
)
97
Stock based compensation expense
50
12
Pension settlement charge
126
—
Loss on extinguishment of debt
—
1
Other, net
(33
)
(24
)
Changes to operating accounts, excluding
the effects of divestitures:
Accounts receivable
67
130
Inventories
673
(276
)
Accounts payable
(50
)
(536
)
Accrued liabilities and other
93
(507
)
Net cash provided by (used in)
operating activities
930
(272
)
Cash flows from investing
activities:
Proceeds from sale of divested
businesses
11
617
Capital expenditures
(284
)
(312
)
Proceeds from settlement of swaps
43
25
Other investing activities
31
13
Net cash provided by (used in)
investing activities
(199
)
343
Cash flows from financing
activities:
Short-term debt, net
(488
)
619
Net proceeds from issuance of long-term
debt
—
989
Payments on current portion of long-term
debt
(2
)
(1,091
)
Repurchase of shares of common stock
—
(325
)
Cash dividends
(184
)
(385
)
Equity compensation activity and other,
net
10
(39
)
Net cash used in financing
activities
(664
)
(232
)
Exchange rate effect on cash, cash
equivalents and restricted cash
(9
)
(13
)
Increase (decrease) in cash, cash
equivalents and restricted cash
58
(174
)
Cash, cash equivalents and restricted cash
at beginning of period
303
477
Cash, cash equivalents and restricted
cash at end of period
$
361
$
303
Supplemental disclosures:
Restricted cash at beginning of period
$
16
$
37
Restricted cash at end of period
29
16
NEWELL BRANDS INC.
RECONCILIATION OF GAAP AND
NON-GAAP INFORMATION (UNAUDITED)
CERTAIN LINE ITEMS
(Amounts in millions, except per
share amounts)
Three Months Ended December
31, 2023
GAAP
Restructuring and restructuring-
related costs
Acquisition amortization and
impairment
Transaction costs and other
[1]
Non-GAAP
Measure
Measure
Reported
Normalized*
Net sales
$
2,076
$
—
$
—
$
—
$
2,076
Cost of products sold
1,455
(37
)
—
(13
)
1,405
Gross profit
621
37
—
13
671
29.9
%
32.3
%
Selling, general and administrative
expense
544
(7
)
(19
)
(6
)
512
26.2
%
24.7
%
Restructuring costs, net
19
(19
)
—
—
—
Impairment of goodwill, intangibles and
other assets
68
—
(68
)
—
—
Operating income (loss)
(10
)
63
87
19
159
(0.5
)%
7.7
%
Non-operating (income) expense
154
—
—
(77
)
77
Income (loss) before income
taxes
(164
)
63
87
96
82
Income tax provision (benefit) [2]
(78
)
16
14
38
(10
)
Net income (loss)
$
(86
)
$
47
$
73
$
58
$
92
Diluted earnings (loss) per share**
$
(0.21
)
$
0.11
$
0.18
$
0.14
$
0.22
*
Normalized results are financial measures
that are not in accordance with GAAP and exclude the above
normalized adjustments. See below for a discussion of these
adjustments.
**
Adjustments and normalized earnings per
share are calculated based on diluted weighted average shares of
415.7 million shares for the three months ended December 31,
2023.
Totals may not add due to rounding.
[1]
Transaction costs and other includes $60
million loss on pension settlement; $14 million related to
Argentina devaluation and hyperinflationary adjustment; $11 million
of inventory reserve due to changes in raw material regulation; $6
million of costs related to completed divestitures; $5 million loss
on investment; $1 million loss due to changes in fair market value
of investment and $1 million gain on disposition of a business.
Includes $14 million of income tax benefit that results from
amortization of a prior year normalized tax benefit.
[2]
The Company determined the tax effect of
the items excluded from normalized results by applying the
estimated effective rate for the applicable jurisdiction in which
the pre-tax items were incurred, and for which realization of the
resulting tax benefit, if any, is expected. In certain situations
in which an item excluded from normalized results impacts income
tax expense, the Company uses a "with" and "without" approach to
determine normalized income tax expense.
NEWELL BRANDS INC.
RECONCILIATION OF GAAP AND
NON-GAAP INFORMATION (UNAUDITED)
CERTAIN LINE ITEMS
(Amounts in millions, except per
share amounts)
Three Months Ended December
31, 2022
GAAP
Restructuring and restructuring-
related costs
Acquisition amortization and
impairment
Transaction costs and other
[1]
Non-GAAP
Measure
Measure
Reported
Normalized*
Net sales
$
2,285
$
—
$
—
$
—
$
2,285
Cost of products sold
1,685
(7
)
—
(1
)
1,677
Gross profit
600
7
—
1
608
26.3
%
26.6
%
Selling, general and administrative
expense
544
—
(16
)
(33
)
495
23.8
%
21.7
%
Restructuring costs, net
3
(3
)
—
—
—
Impairment of goodwill, intangibles and
other assets
326
—
(326
)
—
—
Operating income (loss)
(273
)
10
342
34
113
(11.9
)%
4.9
%
Non-operating (income) expense
57
—
—
(4
)
53
Income (loss) before income
taxes
(330
)
10
342
38
60
Income tax provision (benefit) [2]
(81
)
2
64
10
(5
)
Net income (loss)
$
(249
)
$
8
$
278
$
28
$
65
Diluted earnings (loss) per share**
$
(0.60
)
$
0.02
$
0.67
$
0.07
$
0.16
*
Normalized results are financial measures
that are not in accordance with GAAP and exclude the above
normalized adjustments. See below for a discussion of these
adjustments.
**
Adjustments and normalized earnings per
share are calculated based on diluted weighted average shares of
414.9 million shares for the three months ended December 31,
2022.
Totals may not add due to rounding.
[1]
Transaction costs and other includes $15
million of prior year impact related to an indirect tax reserve for
an international entity; $9 million of bad debt reserve related to
an international customer; $8 million related to expenses for
certain legal proceedings; $3 million related to Argentina
hyperinflationary adjustment; $1 million of costs related to
completed divestitures; $1 million of debt extinguishment costs and
$1 million loss due to changes in fair market value of investments.
Includes income tax expense of $10 million that results from
amortization of prior year normalized tax benefit.
[2]
The Company determined the tax effect of
the items excluded from normalized results by applying the
estimated effective rate for the applicable jurisdiction in which
the pre-tax items were incurred, and for which realization of the
resulting tax benefit, if any, is expected. In certain situations
in which an item excluded from normalized results impacts income
tax expense, the Company uses a "with" and "without" approach to
determine normalized income tax expense.
NEWELL BRANDS INC.
RECONCILIATION OF GAAP AND
NON-GAAP INFORMATION (UNAUDITED)
CERTAIN LINE ITEMS
(Amounts in millions, except per
share amounts)
Twelve Months Ended December
31, 2023
GAAP
Restructuring and restructuring-
related costs
Acquisition amortization and
impairment
Transaction costs and other
[1]
Non-GAAP
Measure
Measure
Reported
Normalized*
Net sales
$
8,133
$
—
$
—
$
—
$
8,133
Cost of products sold
5,780
(86
)
—
(20
)
5,674
Gross profit
2,353
86
—
20
2,459
28.9
%
30.2
%
Selling, general and administrative
expense
2,001
(13
)
(76
)
(23
)
1,889
24.6
%
23.2
%
Restructuring costs, net
95
(95
)
—
—
—
Impairment of goodwill, intangibles and
other assets
342
—
(342
)
—
—
Operating income (loss)
(85
)
194
418
43
570
(1.0
)%
7.0
%
Non-operating (income) expense
458
—
—
(150
)
308
Income (loss) before income
taxes
(543
)
194
418
193
262
Income tax provision (benefit) [2]
(155
)
41
42
4
(68
)
Net income (loss)
$
(388
)
$
153
$
376
$
189
$
330
Diluted earnings (loss) per share**
$
(0.94
)
$
0.37
$
0.90
$
0.45
$
0.79
*
Normalized results are financial measures
that are not in accordance with GAAP and exclude the above
normalized adjustments. See below for a discussion of these
adjustments.
**
Adjustments and normalized earnings per
share are calculated based on diluted weighted average shares of
415.6 million shares for the twelve months ended December 31,
2023.
Totals may not add due to rounding.
[1]
Transaction costs and other includes $126
million loss on pension settlement; $30 million related to
Argentina devaluation and hyperinflationary adjustment; $13 million
of costs related to completed divestitures; $11 million related to
expenses for certain legal proceedings; $11 million of inventory
reserve due to changes in raw material regulation; $5 million loss
on investment; $1 million gain on disposition of a business; $1
million fire-related insurance recoveries and reversal of $1
million to true-up an indirect tax reserve for an international
entity. Includes $40 million of income tax expense that results
from amortization of a prior year normalized tax benefit.
[2]
The Company determined the tax effect of
the items excluded from normalized results by applying the
estimated effective rate for the applicable jurisdiction in which
the pre-tax items were incurred, and for which realization of the
resulting tax benefit, if any, is expected. In certain situations
in which an item excluded from normalized results impacts income
tax expense, the Company uses a "with" and "without" approach to
determine normalized income tax expense.
NEWELL BRANDS INC.
RECONCILIATION OF GAAP AND
NON-GAAP INFORMATION (UNAUDITED)
CERTAIN LINE ITEMS
(Amounts in millions, except per
share amounts)
Twelve Months Ended December
31, 2022
GAAP
Restructuring and restructuring-
related costs
Acquisition amortization and
impairment
Transaction costs and other
[1]
Non-GAAP
Measure
Measure
Reported
Normalized*
Net sales
$
9,459
$
—
$
—
$
—
$
9,459
Cost of products sold
6,625
(22
)
—
(4
)
6,599
Gross profit
2,834
22
—
4
2,860
30.0
%
30.2
%
Selling, general and administrative
expense
2,033
(2
)
(67
)
(60
)
1,904
21.5
%
20.1
%
Restructuring costs, net
15
(15
)
—
—
—
Impairment of goodwill, intangibles and
other assets
474
—
(474
)
—
—
Operating income
312
39
541
64
956
3.3
%
10.1
%
Non-operating expense
155
—
—
130
285
Income (loss) before income
taxes
157
39
541
(66
)
671
Income tax provision (benefit) [2]
(40
)
10
79
(32
)
17
Net income (loss)
$
197
$
29
$
462
$
(34
)
$
654
Diluted earnings (loss) per share**
$
0.47
$
0.07
$
1.11
$
(0.08
)
$
1.57
*
Normalized results are financial measures
that are not in accordance with GAAP and exclude the above
normalized adjustments. See below for a discussion of these
adjustments.
**
Adjustments and normalized earnings per
share are calculated based on diluted weighted average shares of
417.4 million shares for the twelve months ended December 31,
2022.
Totals may not add due to rounding.
[1]
Transaction costs and other includes $30
million related to expenses for certain legal proceedings; $15
million of prior year impact related to an indirect tax reserve for
an international entity; $10 million related to Argentina
hyperinflationary adjustment; $9 million of bad debt reserve
related to an international customer; $6 million of costs related
to completed divestitures; $1 million of debt extinguishment costs;
$136 million gain on disposition of business and $1 million gain
due to changes in fair market value of investments. Includes income
tax expense of $44 million that results from amortization of prior
year normalized tax benefit.
[2]
The Company determined the tax effect of
the items excluded from normalized results by applying the
estimated effective rate for the applicable jurisdiction in which
the pre-tax items were incurred, and for which realization of the
resulting tax benefit, if any, is expected. In certain situations
in which an item excluded from normalized results impacts income
tax expense, the Company uses a "with" and "without" approach to
determine normalized income tax expense.
NEWELL BRANDS INC.
RECONCILIATION OF GAAP AND
NON-GAAP INFORMATION (UNAUDITED)
FINANCIAL WORKSHEET - SEGMENT
REPORTING
(Amounts in millions)
Three Months Ended December
31, 2023
Three Months Ended December
31, 2022
Year over year changes
Reported Operating Income
(Loss)
Reported Operating Margin
Normalized Items [1]
Normalized Operating Income
(Loss)
Normalized Operating Margin
Reported Operating Income
(Loss)
Reported Operating Margin
Normalized Items [2]
Normalized Operating Income
(Loss)
Normalized Operating Margin
Normalized
Net Sales
Operating Income
Net Sales
Net Sales
$
%
$
%
Home and Commercial Solutions
$
1,276
$
31
2.4
%
$
131
$
162
12.7
%
$
1,390
$
(300
)
(21.6
)%
$
358
$
58
4.2
%
$
(114
)
(8.2
)%
$
104
NM
Learning and Development
635
80
12.6
%
8
88
13.9
%
684
88
12.9
%
10
98
14.3
%
(49
)
(7.2
)%
(10
)
(10.2
)%
Outdoor and Recreation
165
(45
)
(27.3
)%
20
(25
)
(15.2
)%
211
(14
)
(6.6
)%
10
(4
)
(1.9
)%
(46
)
(21.8
)%
(21
)
NM
Corporate
—
(76
)
—
%
10
(66
)
—
%
—
(47
)
—
%
8
(39
)
—
%
—
―
(27
)
(69.2
)%
$
2,076
$
(10
)
(0.5
)%
$
169
$
159
7.7
%
$
2,285
$
(273
)
(11.9
)%
$
386
$
113
4.9
%
$
(209
)
(9.1
)%
$
46
40.7
%
*NM - NOT MEANINGFUL
[1]
The three months ended December 31, 2023
normalized items consists of $68 million of impairment of
indefinite-lived tradenames in the Home and Commercial Solutions
segment; $63 million of restructuring and restructuring-related
charges; $19 million of acquisition amortization costs; $11 million
of inventory reserve due to changes in raw material regulation; $6
million of costs related to completed divestitures and $2 million
Argentina hyperinflationary adjustment.
[2]
The three months ended December 31, 2022
normalized items consists of $326 million impairment of goodwill
and indefinite-lived tradenames in the Home and Commercial
Solutions and Learning and Development segments ($321 million and
$5 million, respectively); $16 million of acquisition amortization;
$15 million of prior year impact related to an indirect tax reserve
for an international entity; $10 million of restructuring and
restructuring-related costs; $9 million of bad debt reserve related
to an international customer; $8 million of expenses related to
certain legal proceedings; $1 million of costs related to completed
divestitures and $1 million of Argentina hyperinflationary
adjustment.
NEWELL BRANDS INC.
RECONCILIATION OF GAAP AND
NON-GAAP INFORMATION (UNAUDITED)
FINANCIAL WORKSHEET - SEGMENT
REPORTING
(Amounts in millions)
Twelve Months Ended December
31, 2023
Twelve Months Ended December
31, 2022
Year over year changes
Reported Operating Income
(Loss)
Reported Operating Margin
Normalized Items [1]
Normalized Operating Income
(Loss)
Normalized Operating Margin
Net Sales
Reported Operating Income
(Loss)
Reported Operating Margin
Normalized Items [2]
Normalized Operating
Income (Loss)
Normalized Operating Margin
Normalized Operating
Net Sales
Income (Loss)
Net Sales
$
%
$
%
Home and Commercial Solutions
$
4,428
$
37
0.8
%
$
239
$
276
6.2
%
$
5,194
$
(212
)
(4.1
)%
$
528
$
316
6.1
%
$
(766
)
(14.7
)%
$
(40
)
(12.7
)%
Learning and Development
2,706
213
7.9
%
279
492
18.2
%
2,950
593
20.1
%
48
641
21.7
%
(244
)
(8.3
)%
(149
)
(23.2
)%
Outdoor and Recreation
999
(83
)
(8.3
)%
78
(5
)
(0.5
)%
1,315
86
6.5
%
30
116
8.8
%
(316
)
(24.0
)%
(121
)
NM
Corporate
—
(252
)
—
%
59
(193
)
—
%
—
(155
)
—
%
38
(117
)
—
%
—
―
(76
)
(65.0
)%
$
8,133
$
(85
)
(1.0
)%
$
655
$
570
7.0
%
$
9,459
$
312
3.3
%
$
644
$
956
10.1
%
$
(1,326
)
(14.0
)%
$
(386
)
(40.4
)%
[1]
The twelve months ended December 31, 2023
normalized items consists of $342 million of impairment of
goodwill, indefinite-lived tradenames and other assets primarily in
the Home and Commercial Solutions, Learning and Development and
Outdoor and Recreation segments ($78 million, $241 million and $22
million, respectively); $194 million of restructuring and
restructuring-related charges; $76 million of acquisition
amortization costs; $13 million of costs related to completed
divestitures; $11 million related to expenses for certain legal
proceedings; $11 million of inventory reserve due to changes in raw
material regulation; $9 million Argentina hyperinflationary
adjustment and reversal of $1 million to true-up an indirect tax
reserve for an international entity.
[2]
The twelve months ended December 31, 2022
normalized items consists of $474 million impairment of goodwill
and indefinite-lived tradenames in the Home and Commercial
Solutions and Learning and Development segments ($444 million and
$30 million, respectively); $67 million of acquisition
amortization; $39 million of restructuring and
restructuring-related costs; $30 million of expenses related to
certain legal proceedings; $15 million of prior year impact related
to an indirect tax reserve for an international entity; $9 million
of bad debt reserve related to an international customer; $6
million of costs related to completed divestitures and $4 million
of Argentina hyperinflationary adjustment.
NEWELL BRANDS INC.
RECONCILIATION OF GAAP AND
NON-GAAP INFORMATION (UNAUDITED)
CORE SALES GROWTH BY
SEGMENT
Three Months Ended December
31, 2023
Twelve Months Ended December
31, 2023
Net Sales (Reported)
Acquisitions, Divestitures and
Other, Net [2]
Currency Impact [3]
Core Sales [1] [4]
Net Sales (Reported)
Acquisitions, Divestitures and
Other, Net [2]
Currency Impact [3]
Core Sales [1] [4]
Home and Commercial Solutions
(8.2
)%
0.7
%
(0.7
)%
(8.2
)%
(14.7
)%
2.7
%
0.3
%
(11.7
)%
Learning and Development
(7.2
)%
—
%
(0.5
)%
(7.7
)%
(8.3
)%
—
%
0.4
%
(7.9
)%
Outdoor and Recreation
(21.8
)%
—
%
—
%
(21.8
)%
(24.0
)%
—
%
1.0
%
(23.0
)%
Total Company
(9.1
)%
0.5
%
(0.7
)%
(9.3
)%
(14.0
)%
1.5
%
0.4
%
(12.1
)%
CORE SALES GROWTH BY
GEOGRAPHY
Three Months Ended December
31, 2023
Twelve Months Ended December
31, 2023
Net Sales (Reported)
Acquisitions, Divestitures and
Other, Net [2]
Currency Impact [3]
Core Sales [1] [4]
Net Sales (Reported)
Acquisitions, Divestitures and
Other, Net [2]
Currency Impact [3]
Core Sales [1] [4]
North America
(12.2
)%
0.5
%
—
%
(11.7
)%
(16.5
)%
2.1
%
0.2
%
(14.2
)%
Europe, Middle East, Africa
(5.4
)%
0.3
%
(5.0
)%
(10.1
)%
(8.8
)%
—
%
(1.6
)%
(10.4
)%
Latin America
7.2
%
—
%
0.4
%
7.6
%
3.0
%
—
%
2.6
%
5.6
%
Asia Pacific
(9.8
)%
—
%
1.7
%
(8.1
)%
(21.6
)%
—
%
4.1
%
(17.5
)%
Total Company
(9.1
)%
0.5
%
(0.7
)%
(9.3
)%
(14.0
)%
1.5
%
0.4
%
(12.1
)%
[1]
“Core Sales” provides a consistent basis
for year-over-year comparisons in sales as it excludes the impacts
of acquisitions, completed and planned divestitures (including the
sale of the CH&S and Millefiori businesses), retail store
openings and closings, certain market and category exits, as well
as changes in foreign currency.
[2]
Divestitures include the sale of the
CH&S and Millefiori businesses, certain market and category
exits and current and prior period net sales from retail store
closures (consistent with standard retail practice).
[3]
“Currency Impact” represents the effect of
foreign currency on 2023 reported sales and is calculated by
applying the 2022 average monthly exchange rates to the current
year local currency sales amounts (excluding acquisitions and
divestitures) and comparing to 2023 reported sales.
[4]
Totals may not add due to rounding.
NEWELL BRANDS INC.
RECONCILIATION OF GAAP AND
NON-GAAP INFORMATION (UNAUDITED)
NET DEBT AND NORMALIZED EBITDA
RECONCILIATION
(Amounts in millions)
December 31, 2023
December 31, 2022
NET DEBT RECONCILIATION:
Short term debt and current portion of
long term debt
$
329
$
621
Long term debt
4,575
4,756
Gross debt
4,904
5,377
Less: Cash and cash equivalents
332
287
NET DEBT [1]
$
4,572
$
5,090
Net income (loss)
$
(388
)
$
197
Normalized items [2]
718
457
NORMALIZED NET INCOME
330
654
Normalized income tax [3]
(68
)
17
Interest expense, net
283
235
Normalized depreciation and amortization
[4] [5]
227
225
Stock-based compensation [6]
50
12
NORMALIZED EBITDA
$
822
$
1,143
[1]
The Company defines net debt as gross debt
less the total of cash and cash equivalents. The Company believes
net debt is meaningful to investors as it considers net debt and
its components to be an important indicator of liquidity and a
guiding measure of capital structure strategy.
[2]
Refer to "Reconciliation of GAAP and
Non-GAAP Information (Unaudited) - Certain Line Items" for the
twelve months ended December 31, 2023 and 2022 for further
information and disclosures on normalized items excluded from net
income.
[3]
Refer to "Reconciliation of GAAP and
Non-GAAP Information (Unaudited) - Certain Line Items" for the
twelve months ended December 31, 2023 and 2022 for further
information and disclosures on normalized items excluded from
income tax provision (benefits).
[4]
Normalized Depreciation and Amortization
excludes from GAAP depreciation and amortization for the twelve
months ended December 31, 2023, the following items: (a)
acquisition amortization expense of $76 million associated with
intangible assets recognized in purchase accounting (b) accelerated
depreciation and amortization costs of $31 million associated with
restructuring activities. Refer to "Reconciliation of GAAP and
Non-GAAP Information (Unaudited) - Certain Line Items" for the
twelve months ended December 31, 2023 for further information.
[5]
Normalized Depreciation and Amortization
excludes from GAAP depreciation and amortization for the twelve
months ended December 31, 2022, the following items: (a)
acquisition amortization expense of $67 million associated with
intangible assets recognized in purchase accounting (b) accelerated
depreciation and amortization costs of $4 million associated with
restructuring activities. Refer to "Reconciliation of GAAP and
Non-GAAP Information (Unaudited) - Certain Line Items" for the
twelve months ended December 31, 2022 for further information.
[6]
Represents non-cash expense associated
with stock-based compensation.
NEWELL BRANDS INC.
RECONCILIATION OF GAAP AND
NON-GAAP INFORMATION (UNAUDITED)
CORE SALES OUTLOOK
Three months ending
Twelve months ending
March 31, 2024
December 31, 2024
Estimated net sales change (GAAP)
(10
)%
to
(8
)%
(8
)%
to
(5
)%
Estimated currency impact[1] and
divestitures[2], net
~ 2%
~ 2%
Core sales change (NON-GAAP) [3]
(8
)%
to
(6
)%
(6
)%
to
(3
)%
[1]
“Currency Impact” represents the effect of
foreign currency on 2024 estimated net sales and is calculated by
applying the 2023 average monthly exchange rates to the 2024 local
currency sales amounts (excluding acquisitions and divestitures)
and comparing to 2024 net sales.
[2]
Divestitures include the sale of
Millefiori business, certain market and category exits and current
and prior period net sales from retail store closures (consistent
with standard retail practice).
[3]
Totals may not add due to rounding.
View source
version on businesswire.com: https://www.businesswire.com/news/home/20240209619990/en/
Investor Contact: Sofya
Tsinis VP, Investor Relations +1 (201) 610-6901
sofya.tsinis@newellco.com
Media Contact: Beth Stellato
Chief Communications Officer +1 (470) 580-1086
beth.stellato@newellco.com
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